Monitoring the implementation of corrective actions to evaluate their effectiveness.

In subdivisions and services of CJSC, control over the implementation of corrective measures to eliminate inconsistencies and the causes of their occurrence is carried out by the head responsible for the implementation of these measures.

Evaluation of effectiveness is carried out by specialists of the department where the event was held. At the same time, depending on the result, additional control of products can be carried out at any stage of production, control of the technological process, cost accounting for achieving the required quality, evaluation of technological equipment or tooling, etc.

The criterion for the effectiveness of corrective actions is the complete absence of inconsistencies, the elimination of which was aimed at corrective actions.

When a discrepancy is detected again, an analysis is carried out in terms of the correctness of determining the cause of the discrepancy and the effectiveness of the developed corrective measures.

The centralized control over the implementation of action plans in all divisions and services of the JSC, as well as the implementation of long-term action plans, is carried out by the quality assurance group.

In case of non-fulfillment of any activity within the specified time, the specialist of the quality assurance group finds out the reasons and reports to the representative of the management – the 1st Deputy General Director, who, together with the head of the unit where the corrective action plan is not implemented, and the head of the quality assurance group decide on the allocation of additional resources (if necessary), the postponement of the implementation of activities, the punishment of those responsible, if there were no significant grounds for failure to meet deadlines, etc.

If necessary, based on the results of corrective actions, changes to technological, regulatory or other types of documentation are developed.

The procedure for the development, approval, approval and implementation of the change must comply with the standard SSK GOK 04.01 – Documentation and data management. General provisions.

A change in the corrective action plan must be documented in the form of the main document before the expiration of the action period for which the change is accepted.

The change is put into effect by order or order of the head who approved the main document.

In each division of the CJSC, where corrective action plans are being implemented, records and registration of these documents must be kept.

The centralized accounting and registration of documentation on corrective measures taken in all divisions of the CJSC, as well as the registration of long-term action plans, is carried out by the quality assurance group.

Documents on corrective actions are stored in subdivisions and the quality assurance group under registration numbers. Document storage locations should ensure their safety and speed of finding.

The retention period for documents on corrective action measures is set for:

– current action plans – before execution.

– long-term action plans – 5 years.

Conclusions on section 1.

In the first section, the theoretical foundations of quality management were considered, which are basic in the development of a quality management system. The international experience of this activity was touched upon. When working on the first section, the procedure for obtaining an ISO 9000 certificate was considered and presented in the section – preparatory stages, working part. Also, among the most important points of this section, one can single out the issues of legal regulation of the quality system – the main regulatory documents, they give a visual representation of the basic principles of the functioning of the quality system and its main provisions. Important for the enterprise – if its management decided to implement a quality system, have industry standards for quality management systems. Which will be decisive in the functioning of the quality system. For CJSC Plastic, the main standard is QS-9000 requirements for quality systems of suppliers for the automotive industry. Since the enterprise is a supplier of many automobile plants in the Russian Federation.

SECTION 2. Financial aspects of product quality management.

2.1. Share of quality costs in turnover.

Is this share really significant? The simplest answer is: “Yes, of course!” Where quality costs are properly accounted for, they can range from 2% to 20% or more of sales (turnover). Information published in recent years in the publications of bodies such as the Institute of Quality Assurance in the UK (Institute of Quality Assurance), the American Society for Quality Management (American Society for Quality Control) and the European Organization for Quality (European Organization for Quality) in fact show that this ratio exists in a wide range of businesses in all parts of the Western world. A typical division of quality costs in mechanical engineering might be as follows:

We can show this in a diagram:

Typical ratio of quality cost elements.

Assume that the specified quality costs are 10% of turnover. Let us further assume that by increasing the volume of preventive measures, and hence the increase in preventive costs, it was possible to reduce the total cost of quality by 6% of turnover. Now the distribution of total quality costs can be as follows:

However, total quality costs were only 60% of their original value.

In relation to the original total cost of quality, their new distribution is as follows:

We can represent this situation in a diagram

One of the most authoritative world leaders in the field of quality, Professor Juran, presented the process of saving quality costs as: “The Gold in the Mine” (“Gold is in the mine!”). Without effort, it is impossible to extract gold from the mine. Likewise, without effort, quality cost savings are unattainable.

The most important thing to think about in any company should be the percentage of total quality costs versus total sales.

The cost of quality can only be part of the profit.

Any reduction in quality costs increases profits.

The cost estimates for quality in 2003 can be seen on the following attached sheet: Appendix 1.

Benefit assessment.

At first glance, the amount according to the cost estimate for quality may seem unreasonably large, but taking into account the amount of proceeds from product sales, the plan is 800 million rubles. in 2003, as a percentage, this will be approximately – 0.3% of the proceeds. As mentioned above, quality costs are part of the profit, therefore these costs will reduce profit in the current year. But since quality costs develop the quality system, next year the share of costs should decrease relative to the current year. Although some part of the costs still remains constant, for example, control, staff training, product promotion. Thus, the cost of quality “eats up” a certain part of the profit, but at the same time, without the cost of quality, it is not possible to ensure the proper level of quality that guarantees the competitiveness of the products. Therefore, quality costs are fixed costs aimed at maintaining a competitive level of manufactured products, the profit received compensates for quality costs. It also creates an image of trustworthiness of the enterprise. Which leads to an increase in the number of repeated requests from consumers, that is, an increase in revenue – and, therefore, profit.

2.2. Just-in-time production (JIT-M).

Now we are starting to study the modern approach to production. Just in Time Production (JIT-M) is a production philosophy developed in Japan. Its main principle is the timely provision of goods, whether they are parts requiring assembly or finished products.

JIT-M is based on three principles: dead loss elimination, comprehensive quality control, and total employee involvement. Briefly explain each of the three principles.

Elimination of Dead Losses : In a just-in-time production environment, any non-value-adding activity is defined as waste, that is, unnecessary procedures. Such activities cost the company too much and do not increase the value of the product. The elimination of losses for various activities can be achieved by eliminating defects and preventing overproduction.

Total quality control: The aim here is not to detect defects, but to prevent their occurrence, primarily by tracing problems back to their cause. The center of focus in manufacturing is statistical process control and work-in-progress costing rather than post-processing technical control. This achieves the necessary technical characteristics and eliminates the situation when only at the end of the work it becomes clear that the goals have not been achieved.

Full employee involvement : This means that managers must provide guidance that leads to the employee’s interest in what is happening. There should also be room for teamwork, education and training.

Examples of companies using the JIT-M method include Verbatim, Analog Devices, Hewlett Packard, and Wang.

Figure 1 shows the relationship between JIT-M and various forms of total quality management (TQM) systems. JIT-M assumes that quality is under control. It eliminates all deviations from the process. This means that the production line must be stopped to solve problems, wherever and whenever they arise. The JIT-M system uses a variety of tools to level production.

– KANBAN systems: this is a statistical method that is an integral part of JIT-M and can be used to reduce to a minimum level of inventory of work in progress necessary to prevent interruption of the production process envisaged by JIT-M. Arriving at the correct scale and type of the KANBAN system is a matter of trial and error.

– Pull Production: Connecting machines, developing the KANBAN inventory management system, and requiring uniform capacity utilization provide mechanisms for moving away from the traditional form of pull production under JIT-M. The “push” type system takes care of maintaining a large stock; the system of “pull” involves the purchase of parts when they are needed. This concept is closely related to the kanban system as it acts as a signal to suppliers that the part is needed.

Loss prevention is one of the main objectives of several Japanese control systems. There is a wide range of methods available.

These methods help to avoid specific types of losses:

– JIT-M: “move” and “wait” times.

– KANBAN: Buffer inventory (stock that is kept to deal with unexpected orders) or work in progress (WIP).

– TQM: defects and the need for rework.

– TPM: unplanned equipment downtime.

– Flexible production systems: number of changeovers.

– Employee Involvement: failure to recognize the opportunity and ability of employees to solve problems.

– Design and manufacturability: modifications caused by poor design.

JIT-M is specifically related to the elimination of “moving” and “waiting” time from the production process. Moving materials between jobs or from a factory warehouse to work-in-progress buffer zones is a non-value-adding activity. The buyer will not be willing to pay for movements above the minimum required level. JIT-M, by connecting the equipment in a chain that is most appropriate for the process of moving a product or component, minimizes the number of movements, as well as the distance over which the movement occurs. Connecting machinery into a smooth production line negates both the scale and the very need for buffer stocks between jobs. The purpose of JIT-M in this regard is to ensure a constant supply of materials in the production process, and not to reduce inventory to zero.

2.3. The role of JIT-M in the activities of the financial department.

JIT-M – a new set of techniques and a new base for control. The novelty lies in the fact that it is an integrating, unifying, coordinated method of production and makes it possible to get the right product in the right place at the right time. Such a reorganization of the production process seriously affects the activities of the finance department.

There are five ways in which JIT-M affects the accounting system.

There are many points that can be made, but the main ones are:

– No more internal tracking of work in progress.

– The cost structure no longer focuses on direct labor and overheads as the only component of costs.

– Quality indicators are included in the costing process. Credit is issued only for the production of high-quality goods.

– The process itself is in the center of attention in the system of production and accounting.

– Various types of current operational control eliminate the need for many control reports based on the traditional accounting system.

The main task of the accounting function is not to report on the results of the previous period, but to present cost forecasts, analyze projects and provide solutions.

We will take a detailed look at four key areas where the JIT-M system has a significant impact:

– reports on labor costs;

– inventory tracking;

– overhead costs;

– functional accounting.

When the JIT-M system is introduced, changes are required in the following areas

– Reports on labor costs

– Inventory tracking

– overhead

– Functional accounting

Labor Cost Reporting: Major changes are being made to labor cost reporting in the JIT-M system. They lie in the fact that the distinction between direct and indirect labor costs is becoming less clear, as the interchangeability of personnel becomes common in production cells (small production groups), and support staff is directly attached to the cell. These changes make it difficult to track direct labor costs in detail. More attention is paid not to tracking direct labor costs in hours and detailed reporting, but to using a larger pool of resources. This labor cost reserve is calculated based on the number of units produced.

Inventory Tracking: JIT-M makes tracking and estimating inventory less intensive. This approach results in less inventory of raw materials, work in progress, and finished goods, as well as the allocation of raw materials and work in progress to a single account. It can also lead to partnerships with vendors, which in turn will lead to open orders for materials and supplies. All this ultimately leads to a reduction in the inventory tracking procedure. All these factors reduce the number of operations in the system.

Overhead : With the introduction of JIT-M, there are two key points here:

– Changes in the basis of attribution of overhead costs;

– modification of the procedures for working with deviations, detailed in the accounting model for standard costs.

In particular, there is a movement towards functional accounting, a reduction in the role of variance analysis and simplification of reporting on results.

JIT-M Functional Accounting : Will accelerate the move towards new forms of overhead accounting. By using cells as the main cost object, we can redefine many costs that were originally considered indirect overheads to direct conversion costs. There is a growing recognition that accounting needs to minimize disputed cost allocation.

2.4. The role and tasks of the financial unit in the organization.

This section shows how manufacturing organizations achieve world-class standards through successful implementation of just-in-time production, total quality management, total preventive maintenance, flexible manufacturing systems, and a mindset for manufacturability. This list is by no means exhaustive and merely reflects the organization’s desire to improve customer service and improve quality, conserve inventory, increase flexibility, and ensure on-time delivery. Howell et al. (1992) define four types of roles that management accountants play in an organization:

– Positive-aggressive: This role requires creative methods to obtain useful information that is related to the organization’s progressive production methods. It also helps the company identify opportunities for improvement.

– Positively Responsive: This role assumes a positive attitude of accountants towards progressive changes initiated elsewhere. Accountants themselves can do very little to encourage change.

– Negative-passive: This role does not involve any action to implement change, but the organization’s opposition to this issue forces creative managers to be able to bypass existing systems, not waste time, etc.

– Negative-active: In this case, accountants resist change and thus prevent the company from reaching the world level.

What impact does a world-class organization have on the management accounting unit?

– In the implementation of management accounting, it must be taken into account that the main customers are internal customers.

– The focus of the management accounting staff is on profit maximization, in particular on actual costs, cost trends and continuous improvement.

– Financial workers must go beyond financial reporting to identify and control the many non-functional areas of production. Factors to be considered include customer complaints, sales performance, defect-free products, process times, and schedule adherence.

– Management accountants should review and re-evaluate the investment justification process.

– Finally, they should review the financial statements they submit to reflect the current operating environment.

Let’s take a closer look at each of these aspects.

Buyer Definition

In a world-class organization, the main buyers are internal. This definition implies a number of features. Basically, finance professionals need to improve and improve the control and reporting mechanism in order to better serve domestic buyers. They must identify what internal buyers need and deliver to them, use their skills in analysis and evaluation to assist line managers and always see ways to improve performance. The main task of financial workers is to take part in the overall process and be aware of all business activities and information. World-class accounting requires focusing on the latest information to drive decision making.

Cost management

There is a general consensus that classical cost accounting systems are poor at capturing the cost of production because they ignore the way in which the product being produced affects design, marketing, and general management costs. A single cost accounting system can no longer serve all management needs. Kaplan (1984) believes that more and more organizations are using two main systems: one real-time system for controlling the source of costs, the second – with a longer-term orientation for determining the cost of production and making managerial decisions. It is now recognized that it is the responsibility of management accountants to ensure that accounting information reflects as accurately as possible the actual work process.

Performance evaluation

The operation of a world-class organization requires a focus on many non-financial areas of production and provision. Financial figures are often too confusing, inaccurate, and generalized to be useful. Successful quality control requires data on defects and deficiencies, otherwise it will be difficult to improve quality. Waste costs need to be recorded to identify opportunities for improvement. Management accountants also need to develop a system of performance indicators for the use of equipment and security systems.

Under each heading, possible measures of performance are listed.

Quality Buyer Service
Returns from customers Rejection rates Quality underreporting Filling degree Delivery on time Customer complaint log Error log
Low inventory Security
Inventory measures Inventory holding costs Inventory holding days Number of incidents Frequency of occurrence Severity
Training Profitability
Number of training days Number of hours per person per year Profit Profit on individual commodities Profit margin

Investment strategy

In a world-class organization, management accountants must be able to help the enterprise quantify the most qualitative benefits of an investment, such as improved quality, delivery, service, flexibility, shorter product development time, and better competitive position. When making decisions, focus on the obvious benefits. Howell and Saucey (1992) argue that accountants should be free to use profitability and sensitivity reports when justifying investments. When making cash flow forecasts, they must assess the cross functional impact of customer service, sales, distribution, marketing, etc. They also point out that the consequences of not investing need to be determined.


The list of reports depends on the nature of the report. There are three main types of such reports: divisions, enterprises and corporate.

– Functional department (shop) reporting: Department managers need both operational and financial information to know that there is a problem and take corrective action. They must also receive timely information related to on-time delivery, order book replenishment rates and customer satisfaction levels.

– Enterprise reporting: Includes broader financial information in areas such as product mix, economic performance and overall performance. The accounting department should provide the business unit manager with information about product profitability, product mix, and customers.

– Corporate reporting: In this case, the focus is on ensuring that the management of the corporation has sufficient information about the performance of business units without unnecessary details. In world-class operations, corporate management requires summarizing the performance of business units, determining critical success factors, financial results, summarized more in the managerial than in the financial aspect of accounting and forecasting for the future.

Conclusions on section 2.

In the second section, the financial aspects of quality management were considered. To the extent that finance affects quality management. The main points related to quality management are presented. When considering this section, it was taken into account that the financial aspects of quality management are the main ones, but not decisive. They must be taken into account, but only in conjunction with other problems and issues. The section also deals with production issues in the context of financial aspects of product quality management. When considering financial issues, the main person involved is the financial department of the enterprise.

SECTION 3. Problems in quality management in CJSC “Plastic” and ways to solve and overcome them.

3.1. Methods of managing conflicts arising in the process of quality management.

Like many concepts, conflict has many definitions and interpretations. One of them defines conflict as a lack of agreement between two or more parties, which may be specific individuals or groups. Each side does everything to get its point of view or goal accepted, and prevents the other side from doing the same.

The difference in people’s views, the discrepancy between perceptions and assessments of certain events quite often lead to a controversial situation. If, in addition, the situation that has arisen poses a threat to achieving the goal at least for one of the participants in the interaction, then a conflict situation arises. Quite often, objective contradictions lie at the heart of a conflict situation, but sometimes some trifle is enough: an unsuccessfully spoken word, opinion, i.e., an incident – and a conflict can begin.

Conflict = conflict situation + incident.

The possibility of conflict is inherent in the essence of human life itself. The causes of conflicts are rooted in the anomalies of social life and the imperfection of the person himself. Among the causes that give rise to conflicts, one should name, first of all, socio-economic, political and moral ones. They are a breeding ground for the emergence of various kinds of conflicts. The emergence of conflicts is influenced by the psychophysical and biological characteristics of people.

In all spheres of human activity, when solving various problems in everyday life, at work or leisure, one has to observe conflicts that are different in their content and strength. Newspapers write about it every day, radio broadcasts, television broadcasts. They occupy a significant place in the life of every person, since the consequences of some conflicts are too felt for many years of life. They can eat up the life energy of one person or group of people for several days, weeks, months or even years.

When people think of conflict, they most often associate it with aggression, threats, arguments, hostility, war, and so on. As a result, there is an opinion that conflict is always undesirable, that it should be avoided if possible, and that it should be resolved immediately as soon as it arises.

It happens that in some cases conflict resolution is very correct and professionally competent, while in others, which happens more often, it is unprofessional, illiterate with bad outcomes more often for all participants in the conflict, where there are no winners, but only losers.

The modern point of view is that even in well-managed organizations, some conflicts are not only possible, but may even be desirable. Of course, conflict is not always positive. Some of the conflicts are far-fetched, artificially inflated, created to cover up the professional incompetence of some people and are harmful in commercial activities. For example, a person who argues in a committee meeting just because he or she cannot help but argue is likely to reduce the satisfaction of the need for belonging and respect, and possibly reduce the group’s ability to make effective decisions. Group members may take the point of view of the disputant only in order to avoid conflict and all the troubles associated with it, even without being sure that they are doing the right thing. Other conflicts, being an inevitable companion of the life of any team, can be very useful and serve as an impetus for the development of commercial activities for the better (identifying various points of view, provides additional information, helps to identify more alternatives or problems, etc.)

The driving force in the conflict is the curiosity or desire of a person to either win, or maintain, or improve his position, security, stability in the team, or the hope of achieving an explicit or implicit goal.

What to do in a given situation is often not clear.

A characteristic feature of any conflict is that none of the parties involved knows in advance exactly and completely all the decisions made by the other parties, their future behavior, and, therefore, everyone is forced to act in conditions of uncertainty.

However, there is no generally accepted theory of conflicts that explains their nature, impact on the development of teams, society, although there are numerous studies on the emergence, functioning of conflicts, and their management.

The commonality of all conflicts, regardless of their nature, lies in the clash of interests, aspirations, goals, ways to achieve them, the lack of consent of two or more parties – participants in the conflict. The complexity of conflicts is determined by the reasonable actions of individuals and groups with different interests.

Types of conflicts

CJSC “Plastic” as an organization and joint activities of people to achieve their goals can be considered as a network of interdependent organizational units, effective management is understood as the skillful management of this interdependence. Relations between organizational units have a major impact on the interaction of these units.

The following four types of relationships can be distinguished in each form of group interaction in an organization:

1. Relationships of power and dependency. People working in an organization, to a certain extent, influence each other’s behavior, trying to strengthen, expand their own capabilities and abilities in this area, as well as strengthen their own positions.

2. Negotiating relationships. When making decisions about the allocation of insufficient, limited resources, workers often become dependent on each other in the process of obtaining their own share.

3. Business (“instrumental”) relations. In modern connected production, workers find themselves in the position of “means of production” for each other. Such a natural position of each of the groups of employees of the organization is primarily due to technological connections. We are talking about the fact that the organization of production at its own site is objectively based on the results of the work of other sites and groups. In this regard, the interdependence of groups in joint work for common goals for the organization determines, on the one hand, the motives for resolving disagreements, and on the other hand, the form of sharing the results of the activities of groups within the organization.

3. Socio-emotional relationships that manifest themselves in certain periods in the form of likes and dislikes (more often – individuals to a group and to an organization).

These types of relationships have corresponding trends and central problems. The belonging of specific disagreements to a specific nature (central or behavioral) determines the type of intervention in the conflict. This refers to an external influence for the conflicting parties, aimed at the constructive removal of disagreements. At the same time, it is assumed that the resolution of the conflict itself is ineffective from the standpoint of the goals of the organization (or, according to the criterion of the time of its resolution, it is a clear inconsistency with the goals of the organization).

We single out the following types of conflicts, the emergence of which is most often noted by researchers in the organization:

The first is between employers and employees (intrapersonal).

It can take various forms. One of the most common forms is role conflict, when conflicting demands are made on one person about what the result of his work should be. For example, the situation if the head of the production unit were instructed by his immediate supervisor to increase output, and the quality manager insisted on improving product quality by slowing down the production process. The example suggests that one person was given conflicting tasks and mutually exclusive results were required from him. The cause of the conflict was a violation of the principle of unity of command.

The second – between divisions of large organizations (intergroup).

CJSC “Plastic” and many other large organizations consist of many groups, both formal and informal. Even in the best organizations, conflicts can arise between such groups. Informal organizations that believe that the leader treats them unfairly can unite more strongly and try to “pay off” with him with a decrease in labor productivity. An example of intergroup conflict is the ongoing conflict between the trade union and the administration. Unfortunately, disagreements between line and staff personnel are a frequent example of intergroup conflict. Staff personnel are usually younger and more educated than line personnel and tend to use technical jargon when communicating. These differences lead to clashes between people and difficulties in communication. Line managers may reject the advice of staff specialists and complain about their dependence on them for everything related to information. In extreme situations, line managers can deliberately choose to implement the proposal of specialists in such a way that the whole idea ends in failure. And all this in order to put specialists “in their place.” Staff personnel, in turn, may be indignant that their representatives are not given the opportunity to implement their decisions themselves, and try to maintain the informational dependence of line personnel on them. These are clear examples of dysfunctional conflict.

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